China Merchants Energy Shipping (CMES) — one of the world's largest VLCC owners — plans to diversify into the red-hot containership sector.
The company said it intends to acquire Sinotrans Container Lines (Sinolines), a subsidiary of China Merchants Group, at a tentative price of CNY 2.02bn ($316m).
The final price will be determined by the State-owned Assets Supervision & Administration Commission of the State Council.
CMES said the acquisition would allow it to invest in a "high-quality containership transportation outfit, expand its business development and mitigate risks".
The Hong Kong-based company, which is active in the tanker, bulker, ro-ro and LNG segments, said it will become a "comprehensive shipping outfit" once it acquires Sinolines.
It added that the landscape of the containership sector has undergone major changes and is recovering strongly.
"The injection of container shipping assets will help the listed company to expand its growth, increase profitability and enhance shareholder returns," it said.
It said Sinolines will also benefit from the takeover, as it will be able to tap CMES' strong financial standing and low financing cost for future asset investments.
Sinolines, which is headquartered in Shanghai, operates in the domestic and international liner markets.
It controls a fleet of 32 boxships, of which 19 are owned. Alphaliner ranks the company as the 29th-largest liner player in the world.
Sinolines has two 1,100-teu feeder containerships under construction at China Merchants Jinling and two 2,400-teu units at Yangzijiang Shipbuilding, with deliveries set for 2023.
Between January and August this year, Sinolines recorded revenue of CNY 3.21bn and a net profit of CNY 653m. For the same period last year, revenue was CNY 3.54bn and net profit was CNY 242m.
CMES, part of state conglomerate China Merchants Group, has 130 vessels on the water and nine vessels under construction in China.
It recently splashed out $51.5m to order a 115,000-dwt tanker at Dalian Shipbuilding Industry Co for delivery in April 2024.
Its remaining newbuildings are four VLCCs and four 62,000-dwt multipurpose vessels.
